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Section 79: Compensation not to be assigned, attached or charged

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VII: Employee's Compensation
Competent Labour Forum
Act No. 36 of 2020
Section 78 All 163 Sections of Code on Social Security, 2020 Section 80

Legal Commentary & Landmark Judgments: Section 79

Section 79 of the Code provides that compensation payable under Chapter VII shall not be capable of being assigned, attached, or charged, and shall not pass to any other person by operation of law, protecting disability funds from creditor seizure.

  • Absolute Statutory Immunity from Judicial Attachment: Prohibits any civil court or revenue authority from attaching, seizing, or garnishing employee compensation funds for the recovery of commercial debts or loans.
  • Prohibition of Voluntary Assignment or Charge: Renders null and void any contract, assignment, or power of attorney whereby a worker purports to assign their compensation claim to a creditor, moneylender, or lawyer.
  • Immunity in Bankruptcy & Insolvency: Protects compensation proceeds from vesting in the Official Assignee or Resolution Professional upon the worker's bankruptcy, preserving funds exclusively for subsistence.
Key Landmark Precedents:
  • Union of India v. C.R. Seshadri (1979) 4 SCC 558: Supreme Court held that social security retiral and disability funds are immune from attachment, reflecting the constitutional mandate to protect worker subsistence.
  • Radhey Shyam Gupta v. Punjab National Bank (2009) 1 SCC 376: Supreme Court reiterated that pensionary, retiral, and compensation benefits cannot be attached by execution creditors even after deposit in bank accounts.
  • Bandhua Mukti Morcha v. Union of India (1984) 3 SCC 161: Affirmed that compensation awarded for bodily injury is non-alienable and protected from predatory debt recovery under Article 23.
Courtroom Practice & Strategic Litigation Guidance:

If a commercial creditor or moneylender files an execution petition seeking to attach compensation deposited in a worker's account, file an immediate objection under Section 79 citing Radhey Shyam Gupta to secure an immediate lifting of the attachment.

Section 78 All 163 Sections of Code on Social Security, 2020 Section 80